A preferential trade agreement between Indonesia and Pakistan will open “open new era of cooperation and serve as a foundation for enhanced economic and trade ties between the two brotherly countries,” Indonesian Ambassador to Pakistan M Burhan Mohammad said at a speech at the Lahore Chamber of Commerce and Industry on February 16.

The agreement is the first step on the way to a free trade agreement between the countries, the ambassador said, “to broaden the economic integration.”

Under the agreement, Indonesia has included various Pakistani products for preferential import, including fresh fruits, cotton yarn, cotton fabrics, garments, electric fans, sports goods, leather goods and other industrial products.

Indonesia has also offered market access to kinnow, a citrus fruit, from Pakistan at zero per cent, which will provide a level-playing field to this product in the Indonesian market.

Similarly, Pakistan’s product list to Indonesia under the agreement includes a total of 287 tariff lines for market access at preferential tariff. Pakistan also agreed to provide the same treatment on palm oil products from Indonesia as provided to Malaysia under Pakistan-Malaysia free trade agreement. In 2011, the percentage share of palm oil in total imports from Indonesia was 23 per cent.

There is also a lot of scope for Indonesia to make investment in Pakistan. Indonesia has an advanced petrochemical, rubber, plywood, telecommunication and tourism industry. Indonesia can make direct investment in these industries and can also enter into joint ventures with Pakistani counterparts, the ambassador stated.

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